The Wisconsin Department of Agriculture, Trade and Consumer Protection is cautioning farmers, that predatory loan companies are out in full force attempting to take advantage of the current economic situation.
According to Paul Dietmann with the Wisconsin Farm Center, these are usually companies or individuals who offer to loan farmers about 60 percent of the value of their farm.
Predatory lenders targeting farmers are charging exorbitant interest rates, putting in high closing costs and establishing short timelines with big balloon payments that come due in two or three years, Dietmann notes. The end result is often the creation of a situation where it is very unlikely the farmer will be able to pay the loan back, so the lender ends up with the farm for 60 cents on the dollar.
Staffers at predatory loan companies have been contacting farmers by phone or letter. Some companies also have Web sites or ads with loan information. To avoid falling into a predatory lending trap, farmers and ranchers should consider reviewing all non-standard loan offerings with a neutral party and deal with reputable lenders and people they know, Dietmann says. Also, keep in mind the old advice, “If it sounds too good to be true, it probably is.”
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